Welcome to the world of confusing convictions.
A nostalgic to the core, stuck in history am trying hard to find my way in the jungle called civilization.

Saturday, January 10, 2009

Hey Ram...

The recent Satyam fiasco is nothing new to the corporate world and neither would it be the last. Even though I am not so sure about my credentials to talk about financial and capital market models, in my view, the race for an attractive valuation in the stock market has definitely played a hand for the promoters to indulge in such a heinous crime. When an entity like the Satyam falls, it’s not the falling empire that is a headache, but the collateral damages that disturb the society, both socially and financially. In case of Satyam, it is the same with approx 53000 employees and innumerable investors (especially retail investors).The situation is not so new to the corporate world at large, but definitely new to the Indian set up. For India Inc, which is fiddling around to take future bigger steps, such a shock could never have come up at a worse time. Indeed, with current credit crunch and bleak economic situation, it could ill afford to have such a blot in its kitty. However, in my view, such a thing was waiting in the wings even though we hardly acknowledge it.The relation and the control between the promoters and the companies in India are indeed too close for comfort. The idea of company as an individual entity is more of a legal status than a real one and hence, the dangers of personally motivated irregularities are high. The public perception about some of the listed companies and their managements are not positive, even though they enjoy heavy influences on our capital markets. The idea of corporate governance, peer audits or independent board of directors enjoy tremendous challenges in a country where corruption is amok and the unholy nexus between political parties and the corporate czars are very open secret.However, it would be unfair to paint the whole system with same brush even though there are hardly any dividends for being honest in India.There will be Satyams in future also, make no mistake about this. Make no mistake of the fact also that all political dishonesty would be very cleverly submerged by the government, even though the role of Andhra politicians across the board and their hobnobbing with the now disgraced Raju family was very evident till a few days before. Never mind that Maytas got such eye candy infrastructure projects without proper procedures being followed and same political parties were very sure about their success.And then there is the role of external auditors. I can bet about the images that people have for the CAs in general. The propensity to lie and pile up illegal money is so rampant in this country and amongst common public that a few dishonest CAs become very handy to cover up such illegal activities. In that sense, what Raju has done might be a crime only bigger in proportion and effect but not strange to India. From not declaring all income sources to finding ingenious ways to hide wealth from tax collector’s preying eyes are commonplace among Indians.So, instead of blaming Raju and making a culprit out of him we would be better off if our simple acts are put under the scanner of right and wrong. The effect and magnitude of the crime could only make a variation in the punishment meted out, but could not differentiate in the category.Hence, if one such confession could make some positive changes within our minds, be it personally or professionally, it would do a huge service for this whole country. And as for the corporate India, this incident could well be a turning point in their hitherto unknown challenges.

We, as retail investors in both capital and social markets, could only hope for the better senses(x).